Sluggish air cargo activity ahead in 2013

Friday, January 04, 2013

Worldwide air freight rates activity dragged in 2012 with supply surpassing demand in key regions throughout the world, depressing air freight rates in notable lanes.
For the new year, two officials in the industry don’t see much change ahead.
Gene Ota, director of product management for APL Logistics, said his clients think air freight rates will remain somewhat flat. “They’re not expecting any huge increases,” he told American Shipper. “As far as capacity and the rates, I don’t think (airlines are) taking out any additional capacity from what they’ve already taken out this past year.”
He’s hopeful for a turnaround in the foreseeable future, but for now, the current air freight market is the new reality.
“I think 2014 might be more of a year of growth in air freight,” he said, “but for 2013 at least, it’s probably going to remain about the same as 2012.”
Air freight volumes, on the whole, were negative in 2011 and even though industry insiders were hopeful for a 2012 turnaround, that never occurred. David Ross, managing director of Stifel Nicolaus, was blunt about air freight activity last year. “For 2012, I would say air freight was weak, disappointing, poor, negative,” he said.
In the U.S. market, Ross said air cargo will continue to come out of the skies and onto the ground in 2013. This is a long-term trend that comes from shippers looking closely at their supply chains and searching for cost savings wherever they can be found.
“Putting the right freight in the right network with the right carrier is still a challenge for shippers,” Ross said, “and they’ll continue trying to figure it out. When they figure it out, that generally leads to less air and more ground.”
Some air carriers have started to ground some of cargo planes to ride out capacity and rate turbulance. To read more, see American Shipper's January issue article, "Freighter fall-off." - Jon Ross